Bidding for renewable energy projects slumps sharply; storage, grid build-out now critical: ICRA

The bidding activity of renewable energy projects has slowed sharply this fiscal, raising concerns over project execution and transmission preparedness, rating agency ICRA said on Thursday.

Only 5.8 GW of RE capacity was awarded in the first eight months of FY2026, a steep fall from 47.3 GW in FY2024 and 40.6 GW in FY2025.

At the same time, 40–45 GW of capacity with signed bids still awaits power purchase agreements (PPAs), according to industry estimates.

“The decline in new project bids and delays in signing PPAs… clearly reflect concerns on the execution related to available transmission connectivity for the renewable energy sector,” said Girishkumar Kadam, Senior Vice President & Group Head – Corporate Ratings, ICRA.

He said reported incidents of grid curtailments in Rajasthan for renewable assets, particularly solar assets, during the solar hours in a few time blocks, due to grid stability requirements, are also an area of concern.

"Hence, a focus on the enhancement of both the storage capacity and grid strengthening within the state as well as at the inter-state level in a time-bound manner remains extremely critical, as the share of renewables increases in the generation mix," he noted.

ICRA projects the share of renewable energy, including large hydro, in India’s power generation to cross 35% by FY2030, up from 22.1% in FY2025.

But this depends on timely project execution, adequate transmission infrastructure and quicker PPA closures.

Battery Energy Storage Systems (BESS) are emerging as a key tool for grid stability as renewable variability increases.

The government has rolled out viability gap funding for storage and extended transmission charge waivers for such projects till 2028.

ICRA maintained a ‘Stable’ outlook for the renewable energy sector, supported by strong policy backing, competitive tariffs and rising demand from commercial and industrial consumers. However, challenges persist around land acquisition, transmission readiness, PPA delays and exposure to equipment prices and discom finances.